Trade talks between India & the US have been stalled by disagreements over import duties on auto parts, farm products, and steel.
According to Reuters, the disagreements could jeopardize hopes of a deal being reached before US President Donald Trump’s deadline on July 9 for reciprocal tariffs.
The current impasse is a departure from previous optimism. This was sparked by Trump’s claim that New Delhi offered an “all-tariffs-free” deal to American goods, as well as suggestions made on both sides suggesting that India could be the first nation to agree on new US tariffs.
Roadblocks
Reuters reported that Indian officials told them the US had not yet agreed to India’s requests for concessions in existing tariffs for steel and auto components, as well as a reduction of the reciprocal 26% tariff proposed for July 9th.
The report quoted a source as saying that the U.S. wanted India to first commit to deeper tariff reductions on imports of farm products like corn and soybeans, along with cars and alcohol beverages.
The report said that an Indian delegation would be visiting Washington before the deadline. Discussions may now be geared towards a more comprehensive deal than a hastily-arranged interim agreement.
India under Narendra Modi is working hard to become a key ally of the United States. Apple is one of the American companies that are being targeted as part of this effort to divert supply chains from China.
Despite this, the trade talks have had difficulty progressing.
First source: India is eager, but not desperate, to reach a final agreement before July 9.
Sources claim that India has offered to reduce tariffs on almonds and pistachios and to offer preferential treatment to American imports from sectors like energy, automobiles and defence.
Sources indicated, however, that Modi’s and Trump’s direct intervention could lead to an unexpected breakthrough.
Partnership
Indian officials stressed a long-term commitment to the US, as a reliable economic partner. They also asserted policy independence in spite of the current deadlock.
Modi and Trump reached an agreement in February to complete the first stage of bilateral trade by 2025.
The goal was to raise trade to approximately $500 billion dollars by 2030, up from $191 billion.
India also pursues free trade agreements to counteract any potential changes in policy under the Trump Administration.
The ongoing talks with the European Union are expected to result in a pact later this year. Also, the recently completed negotiations with the United Kingdom for an FTA.
Ram Singh was quoted as the head of Indian Institute of Foreign Trade (a think tank funded by the government) in this report.
Now the ball is in America’s court. India does not want to be in a trade relationship that is a lose-lose.
The report stated that India would be able to absorb any reciprocal tariffs in the event of a worst case scenario. The report said that India has a sustained advantage in tariffs compared with rivals like Vietnam and China.
The US tariff increases of 10% or more in early April appeared to have had only a small impact on India’s exports, which increased from $14.17 to $17.25 Billion in April and May.
The post Donald Trump’s tariff deadline looms, as India and US trade deal faces obstacles may be updated as new developments unfold
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